Using the oil find to change our fortunes

Last Thursday, President Nana Addo Dankwa Akufo-Addo turned on the valves of Floating Production, Storage and Offloading (FPSO) John Agyekum Kufuor for oil to flow from the country’s third independent oil Fields, the ENI-operated Sakofa Project, located Offshore Cape Three Points (OCTP).

After Kosmos Energy helped to de-risk the country’s shores 10 years ago with the discovery of first commercial oil, the country has made 25 new discoveries around the Tano Basin OCTP by various players, including the wholly owned Ghanaian international oil company, Springfield Group.

The latest field holds about 770 million barrels of oil equivalent (mboe), split into 500 million barrels of oil and 270mboe of non-associated gas – about 40 billion cubic metres.

The three independent developed fields – Jubilee, TEN, and Sankofa-Gye Nyame operations – come with oil and associated gas, essential for domestic use and the country’s power sector to propel the national transformation and industrialisation agenda.

The active fields mean that within a decade, Ghana’s total oil output is inching towards 250,000 barrels per day (bopd) with natural gas flow estimated at 350 million standard cubic feet a day (mscf/d).

Although the high expectations that greeted the oil find because of the perception that the resource is known to have changed the fortunes of countries that managed it well have not been met, the production of oil in Ghana has not been a completely wasteful exercise. Most importantly, it has not turned into the much anticipated curse it becomes in the hands of developing countries such as Ghana.

Starting production in December 2010 catalysed the economy to grow at more than 14 per cent in 2011, making Ghana the fastest growing economy in the world that year. The news reverberated across the world, leading to the attraction of blue-chip investors and companies to different sectors of the economy.

Even though the country has since not experienced that quantum growth, the overall size of the economy has expanded about three folds since, enabling the country to rub shoulders with emerging and advanced economies as a golden destination with prospects for business.

What has, however, eluded the country is sustainable catalytic growth that oil was expected to engender. Our inability to put in place the necessary infrastructure to process oil and gas for maximum value is partly to blame for the level of impact the find has had on the economy, particularly in meeting the people’s expectations.

The Atuabo Gas Processing Plant, which processes natural gas to lean gas to fire thermal plants and some amount of liquefied petroleum gas (LPG) for homes, came into being about four years after pouring first oil on Jubilee Field. The best use we could put the valuable gas to during the absence of the plant was its re-injection into oil wells to improve flow, while the better part was flared into thin air.

Part of the dashed expectation is also attributable to the low price of the commodity since production started. A barrel of crude oil averaged around $80 in 2010 but this has further reduced to an average of $53 a barrel presently.

The Daily Graphic believes that the coming of oil as part of the economic mix is welcome news any day. It is a resource found in deep seas and its environmental impact can be managed better than resources sourced onshore.

We believe that per the quantities that the country is producing, it is important to use it as a stepping stone, a catalyst to propel other areas such as capacity building in technical and vocational disciplines and agriculture, which is a pro-poor sector that can have mass impact across the economy.

It will not be wise to bank all our hopes on oil as the panacea for development and poverty alleviation. We should rather develop a world-class petro-chemical industry which will produce bi-products and create skilled jobs for our people. This industry can enhance the agricultural sector, which in recent times, has seen sharp declines.

The Daily Graphic also wants to urge the stakeholders in the sector to take the issue of expectation management seriously and institute measures to continuously sensitise the people to the true state of affairs in the oil sector, while counselling them on alternative options of career and vocation which can equally provide them with a decent livelihood.

We once again congratulate President Akufo-Addo and his predecessors, former President John Mahama, late President Mills, former President J.A. Kufuor and former President JJ Rawlings for thier roles that culminated in the oil find.